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VAT

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VAT

  1. 1. IMPLEMENTATION OF VALUE ADDED TAX IN TALLY.ERP 9
  2. 2. The information contained in this document is current as of the date of publication and subject to change. Because Tally must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Tally, and Tally cannot guarantee the accuracy of any information presented after the date of publication. The information provided herein is general, not according to individual circumstances, and is not intended to substitute for informed professional advice. This document is for informational purposes only. TALLY MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS DOCUMENT AND SHALL NOT BE LIABLE FOR LOSS OR DAMAGE OF WHATEVER NATURE, ARISING OUT OF, OR IN CONNECTION WITH THE USE OF OR INABILITY TO USE THE CONTENT OF THIS PUBLICATION, AND/OR ANY CONDUCT UNDERTAKEN BY PLACING RELIANCE ON THE CONTENTS OF THIS PUBLICATION. Complying with all applicable copyright and other intellectual property laws is the responsibility of the user. All rights including copyrights, rights of translation, etc., are vested exclusively with TALLY SOLUTIONS PRIVATE LIMITED. No part of this document may be reproduced, translated, revised, stored in, or introduced into a retrieval system, or transmitted in any form, by any means (electronic, mechanical, photocopying, recording, or otherwise), or for any purpose, without the express written permission of Tally Solutions Pvt. Ltd. Tally may have patents, patent applications, trademarks, copyrights, or other intellectual property rights covering subject matter in this document. Except as expressly provided in any written licence agreement from Tally, the furnishing of this document does not give you any licence to these patents, trademarks, copyrights, or other intellectual property. © 2009 Tally Solutions Pvt. Ltd. All rights reserved. Tally, Tally 9, Tally9, Tally.ERP, Tally.ERP 9, Shoper, Shoper 9, Shoper POS, Shoper HO, Shoper 9 POS, Shoper 9 HO, TallyDeveloper, Tally Developer, Tally.Developer 9, Tally.NET, Tally Development Environment, Tally Extender, Tally Integrator, Tally Integrated Network, Tally Service Partner, TallyAcademy & Power of Simplicity are either registered trademarks or trademarks of Tally Solutions Pvt. Ltd. in India and/or other countries. All other trademarks are properties of their respective owners. Version: Implementation of Value Added Tax in Tally.ERP 9/1.0/July 2009
  3. 3. Contents Contents Introduction Value Added Tax in India ......................................................................................................................... 1 General Terminologies of VAT ................................................................................................................ 2 Composite Dealers .................................................................................................................................... 3 Features of VAT in Tally.ERP 9 .............................................................................................................. 4 Lesson 1: Enabling VAT in Tally.ERP 9 1.1 Creating a Company ......................................................................................................................... 5 1.2 Enabling VAT ................................................................................................................................... 6 Lesson 2: Processing Purchases & Sales Entries 2.1 Taxable Purchases and Sales .......................................................................................................... 10 2.1.1 Purchase of Taxable Goods ..................................................................................................................... 10 2.1.2 Purchase Returns ..................................................................................................................................... 23 2.1.3 Sale of Taxable Goods ............................................................................................................................. 25 2.1.4 Sales Returns ........................................................................................................................................... 36 2.2 Purchase and Sale of Exempt Goods .............................................................................................. 37 2.2.1 Exempted Purchases ................................................................................................................................ 37 2.2.2 Exempted Sales ........................................................................................................................................ 39 2.2.3 Sales Returns ........................................................................................................................................... 41 2.3 Inter-state Purchases and Sales ....................................................................................................... 42 2.3.1 Inter-state Purchases ............................................................................................................................... 43 2.3.2 Inter-state Sales ....................................................................................................................................... 45 2.3.3 Inter-state Sales under Sec. 10 ................................................................................................................ 47 2.4 Purchase from Un-registered Dealers ............................................................................................. 49 2.5 Exports ............................................................................................................................................ 54 2.6 Import .............................................................................................................................................. 58 Lesson 3: Reversal of Input Tax Credit 3.1 Goods used for Civil Structures ...................................................................................................... 63 3.2 Goods used for Consumption ......................................................................................................... 67 3.3 Purchase – Automobile Spare Parts from Non-Dealer of Automobile ........................................... 69 3.4 Purchase of Air Conditioners from Non-Dealer of Air Conditioners ............................................. 72 3.5 Goods Distributed as Free Samples & Gifts ................................................................................... 75 3.6 Goods Lost on Theft, Loss Etc. ...................................................................................................... 76 3.7 Loss of Inputs by Fire or Accident ................................................................................................. 78 3.8 Inputs Damaged in Transit or Destroyed before Manufacture ....................................................... 82 3.9 Unavailed Credit on Capital goods (Time Barred) ......................................................................... 83 i
  4. 4. Contents 3.10 Consignment/Branch Transfers without Form F .......................................................................... 84 3.10.1 Consignment Transfers without Form F ................................................................................................ 84 3.10.2 Reversal of Input Tax Credit on Consignment Sent without Form F .................................................... 86 3.10.3 Sales – Branch Transfers ....................................................................................................................... 87 3.10.4 Reversal of Input Tax Credit for Stock Transferred without Form F .................................................... 89 3.11 Purchases for Production of Exempted Goods (Finished) ............................................................ 90 3.12 Interstate Sale without 'C form ..................................................................................................... 90 3.13 ITC Availed for Finished Goods Subsequently Exempt .............................................................. 93 3.14 Others (specify) ............................................................................................................................. 94 Lesson 4: Payment of VAT Liability 4.1 Advance Tax, Entry Tax and TDS Adjustment Entries .................................................................. 95 4.1.1 Adjustment Towards Advance Tax or Refund .......................................................................................... 95 4.1.2 Adjustment Towards Entry Tax Paid ....................................................................................................... 98 4.1.3 Adjustment Towards TDS ...................................................................................................................... 100 4.2 Adjustment Towards CST Dues ................................................................................................... 102 4.3 Adjustment of ITC against Tax Payable ....................................................................................... 103 4.4 Payment of VAT ........................................................................................................................... 105 Lesson 5: VAT Reports 5.1 VAT Computation Report ............................................................................................................ 107 5.2 Statutory Returns and Annexures ................................................................................................. 112 5.2.1 VAT Return Form I ................................................................................................................................ 112 5.2.2 VAT Annexures ...................................................................................................................................... 114 Lesson 6: E–VAT 6.1 Online Filing ................................................................................................................................. 119 6.2 Uploading in Excel Format ........................................................................................................... 119 ii
  5. 5. Introduction Lesson Objectives On completion of this lesson you will Understand the concept of VAT General terminologies of VAT Value Added Tax in India The Value Added Tax (VAT) is a type of indirect tax and is one of major source of revenue to the state. The VAT system was introduced in India by replacing the General Sales Tax laws of each state. Presently in India, out of 35 States and Union Territories, 32 are following this new system of Sales Taxation. The States/Union territories which are yet to implement the VAT system are Andaman and Nicobar Islands, Nagaland and Lakshadweep. The VAT system of taxation was adopted by Indian States and Union Territories in the Year 2005 by replacing the General Sales Tax Laws with New Value Added Tax Acts and the supporting Value Added Tax Rules for proper administration and collection of Tax. Each state or union territory is having its own methods to assess the tax liability and collection methods from the dealers who fall under the purview of VAT. The Administration of VAT system was undertaken by the Commercial Taxes Department of each state along with the Excise and other indirect taxes. For easy and quick assessment of taxation and prevention of tax evasion, the department has introduced the Registration System. This Registration system of VAT helps in identifying the assessees who come under the purview of VAT and are liable to collect and pay VAT. For encouraging the Registration process some benefits or concessions are given to the dealers. The Registered dealers are allowed to collect VAT payable by them from the immediate buyer. They can claim the VAT paid on purchases made only from a registered dealer. The unregistered dealer cannot charge VAT on the invoices, so the buying dealer cannot claim the VAT amount 1
  6. 6. Introduction paid as ITC. Also, the unregistered dealers are not eligible for availing concessions, for e.g., exemptions, which are given by the government. The commercial tax department introduced a new method of levying tax called as the Composi- tion Scheme especially after considering the small dealers whose turnover was low and were unable to maintain the records as per the requirements of VAT Act. These dealers have to pay a lump sum as VAT on the sale value of goods. The VAT paid will not be shown in the invoices. They can account for the total turnover and pay VAT on the same at the end of their return period. For Assessing the VAT liability of dealers, each state has introduced the system of Filing Returns for different tax periods. The tax periods could be Monthly, Quarterly, Half-yearly and Annual. Each dealer has to file the Return by specifying the total turnover which is exempted as well as liable for VAT along with the purchases made and tax paid on it with the amount of VAT payable or Input tax credit carried forward within the stipulated period. General Terminologies of VAT Input Tax This is the tax paid on purchases Output Tax This is the tax charged on sales Input Credit The excess amount of Input tax over output tax for the current period which is permitted to be set off against Output tax of subsequent periods is termed as Input Credit. TIN Tax Identification Number (TIN) is the Registration Number given by the department to the dealer at the time of Registration. This needs to be quoted at all required places where the regis- tration details are to be provided. Tax Invoice This is the Sales invoice format issued by one Registered Dealer to another. Based on this Invoice, ITC can be claimed by the purchasing dealer. Retail Invoice The Sales invoice format used for invoicing the Exempted Sales and the Sales made to Unregis- tered dealers is termed as Retail Invoice. 2
  7. 7. Introduction Registered Dealer This term is used to identify a dealer who is registered either under Voluntary Registration or Compulsory Registration under the VAT Act. Such dealer can issue tax invoice and also claim the tax paid on purchases made from other registered dealers as Input tax credit. Unregistered Dealer Dealers who are not registered under the VAT Act are called as Unregistered Dealers (URD). Such dealers cannot issue tax invoice. They can neither Charge Tax nor Claim Input Tax Credit. Purchase Tax The Tax paid on goods purchased from unregistered dealers is liable to Purchase Tax. The purchase tax is treated as Output VAT payable by the dealer as it is a liability. It has to be paid while making the payment towards VAT liability. Based on the Rules and Regulations, the Input Tax Credit can be claimed on the payment made towards Purchase Tax. Reversal of Tax Credit It refers to the reversal of input tax credit already claimed and availed. Composite Dealers The State Government may, by a notification in the Official Gazette, provide for a scheme of com- position, subject to the tax, conditions and restrictions as may be provided therein, of tax payable by the dealers who are engaged in the business, as prescribed, of re-selling at retail, any goods or merchandise. Different types of schemes may be notified for different classes of retailers. The composition scheme depends on the type of business covered by the Act. The dealers engaged in trading of goods can get the business registered under composition scheme only if the total annual turnover is not exceeding the specified Threshold turnover limits. The tax rates are decided at pre-defined flat rates (for e.g., 8% on Gross Turnover). These rates differ depending on the type of business. The Composition dealers also have the option of voluntary registration. Unlike registered dealers, the composite dealers need not maintain books of accounts and documents. They are also not required to follow rules and procedures for issuing tax invoices, maintaining stocks etc. The composition dealers cannot collect the tax amounts from their immediate registered/unregis- tered dealers. The tax amounts also are not to be shown in the invoice. Such tax amount is treated as the expenditure incurred for the business and allowed as business expenditure. For example, the Karnataka Value added Tax, provides that a dealer whose turnover does exceed fifteen Lakhs for four consecutive quarters, for e.g., works contractors, hoteliers, crushing units of granites etc., can opt for composition scheme. According to this composition scheme, the rate of tax applicable for other than crushing units is five percent and for crushing units, the tax is to be paid on the basis of crushing machines ranging from Rupees one lakh to two Lakhs as applicable from time to time. 3
  8. 8. Introduction Difference between Regular and Composite Dealers The following are the cases how the composition dealers are different from Regular Dealers: The Composition dealers cannot collect tax separately from the buyers as it is considered as business expenditure, but the Regular dealer can collect tax. The Composition dealers cannot claim the tax paid on their purchases as Input tax credit whereas the regular dealer can claim ITC. The composition scheme, is generally not applicable to the dealers who are engaged in Inter-state trade or commerce. The Regular dealers can be engaged in inter-state trade. The dealers registered under Composition Scheme need not maintain books of accounts and documents when compared to Regular dealer. Features of VAT in Tally.ERP 9 The salient features provided for VAT in Tally.ERP 9 are as follows: Quick, easy to setup and use. Pre-defined VAT/Tax Classifications for Purchase and Sale of goods Facility to create separate VAT ledgers with VAT/Tax Classifications for input as well as out- put VAT Facility to print tax invoice Complete tracking of each transaction till generation of returns Better VAT-returns management Generating of VAT Computation report with details pertaining to The value of transactions recorded using the classifications available for VAT Increase/decrease in input/output VAT on account of adjustment entries made using the VAT Adjustments available on using the voucher class created for journal voucher. VAT Payable or refundable Generating of “VAT Classification Vouchers” report for each of the VAT/Tax classifications Facility to Drill-down the various VAT classifications from VAT Computation report till the last level of voucher entry Generating VAT Returns and Annexure Greater tax compliance 4
  9. 9. Lesson 1: Enabling VAT in Tally.ERP 9 Lesson Objectives On completion of this lesson, you will be able to Enable VAT in Tally.ERP 9 Create Ledgers with VAT Classifications 1.1 Creating a Company It takes a one-time configuration in Tally.ERP 9, to enable VAT. Let us take an example of the following dealer to illustrate the same. Example: M/s. National Traders is a company engaged in trading of goods both within and outside the state. On 1-4-2009, M/s. National Traders registers under the VAT Act as a dealer of goods. Step 1: Let us create a company and enable VAT Go to Gateway of Tally > F3: Company Info. > Create Company In the Company Creation screen, 1. Specify National traders as the Company Name 2. Enter the Address details 3. Select India in the Statutory Compliance for field 4. Select Tamil Nadu in the State field 5. Enter the Pin code, Telephone No., Mobile No. and E-Mail details 6. Select Accounts with Inventory in the Maintain field 5
  10. 10. Enabling VAT in Tally.ERP 9 7. Enter the other required information in the Company Creation screen The completed Company Creation screen is displayed as shown: Figure 1.1 Company Creation screen Press Y or Enter to accept and save. The List of States appear for selection only when India is selected in the Statutory compliance for field. The state-specific VAT Compliance is dependent upon the State selected. However, in the case of companies already existing in Tally.ERP 9, VAT can be enabled in F11: Statutory & Taxation features as explained in the next session. 1.2 Enabling VAT Go to Gateway of Tally > F11: Features > F3: Statutory & Taxation In the F3: Statutory & Taxation features, 1. Set Enable Value Added Tax (VAT) to Yes 2. Set Set/Alter VAT Details to Yes 3. The Company VAT Details screen will be displayed. 4. In the Company VAT Details screen, select the State where the business of the dealer is reg- istered. Here select the State as Tamil Nadu. Select the Type of Dealer as Regular and enter the Date in Regular VAT Applicable From field. 6
  11. 11. Enabling VAT in Tally.ERP 9 5. Under Additional Information section, new fields have been introduced to specify the details pertaining to Assessment Circle, Division, Area Code, Import Export Code, Authorised by, Authorised person, Status/Designation and Place. The details entered in these fields will be captured in the Report Generation screen of Return Form and Annexures as per requirement. Figure 1.2 VAT Details screen The details entered/modified manually in the fields of Report Generation screen of Return Form and Annexures will be captured in the forms as a one- time measure. On exiting the screen, the temporarily modified details will not be saved. Every time the report is generated, the information entered in the Company VAT Details screen of F3: Statutory & Taxation Features will be displayed. 6. Specify the details in VAT TIN (Regular), Inter-state Sales Tax Number and PAN / Income - Tax Number. 7
  12. 12. Enabling VAT in Tally.ERP 9 Enter the PAN/Income – Tax No Figure 1.3 F3: Statutory & Taxation Features 7. Press Enter to accept and save. 8
  13. 13. Lesson 2: Processing Purchases & Sales Entries Lesson Objectives On completion of this lesson, you will be able to Record Purchase and Sales transactions at different VAT rates Record transactions with additional expenses Record transactions using Credit Note and Debit Note Generate Tax Invoice A VAT registered dealer, while purchasing goods within the state pays Input VAT and charges Output VAT at the time of sales on the assessable value of taxable goods. At the end of each month they are required to compute Input VAT paid on purchases made during the month and Output VAT payable on sales during the month. If the VAT payable is more than the Input VAT paid on purchases, the difference is payable to the government or in case where the Input VAT paid on purchases is in excess of Output VAT payable during the month, the excess VAT paid is carried forward to the next month. 9
  14. 14. Processing Purchases & Sales Entries 2.1 Taxable Purchases and Sales 2.1.1 Purchase of Taxable Goods Example 1: On 2-4-2009, National Traders purchased the following items from Excel Traders vide invoice number 01: Item Description Quantity (in Nos) Rate Amount VAT Commodity Code Gold Jewellery 10 20,000 2,00,000 1% 102 GI Pipes 200 150 30,000 2% 2100 Insulators 220 320 70,400 4% 2069 Silk Fabrics 10 5,000 50,000 4% 2127 Vacuum Cleaner 15 15,000 2,25,000 12.5% 329 An amount of Rs. 5,000 was paid as freight charges which was included in the invoice. Step 1: Let us create the required Masters to record the above transaction. Creating Ledgers i. Purchase Ledger To create a Purchase Ledger Go to Gateway of Tally > Accounts Info > Ledgers > Create 1. Enter the Name as Purchases @ 1% 2. Select Purchase Accounts as the account group in the Under field 3. Set Inventory values are affected to Yes 4. Set the option Used In VAT Returns to Yes to display the VAT/Tax Class sub-screen. 10
  15. 15. Processing Purchases & Sales Entries 5. Select Purchases @ 1% as the VAT/Tax Class from the list of VAT/Tax Class as shown: Figure 2.1 Purchase Ledger – Used In VAT Returns 6. Press Enter to return to the Purchases @ 1% ledger creation screen and set the option Use for Assessable Value Calculation to No Figure 2.2 Purchase Ledger – Completed 11
  16. 16. Processing Purchases & Sales Entries 7. Press Y or Enter to accept and save. In the VAT/Tax class screen, the Activated From column will display the date of activation of particular classification in the current financial year. The Deactivated From column will show the date of deactivation irre- spective of the financial year. In order to use the same purchase ledger as additional ledger, the option Use for Assessable Value Calculation needs to be set to Yes after dis- abling Inventory values are affected to apportion the additional amount towards assessable value and tax amount. Similarly, create the following purchase ledgers: Name Under Inventory Used in VAT/Tax Class Use for Group values are VAT Assessable affected Returns Value Calculation Purchases @ Purchase Yes Yes Purchases @ 2% No 2% Accounts Purchases @ Purchase Yes Yes Purchases @ 4% No 4% Accounts Purchases @ Purchase Yes Yes Purchases @ 12.5% No 12.5% Accounts ii. Input VAT on Purchase Ledger To create an Input VAT ledger, Go to Gateway of Tally > Accounts Info. > Ledgers > Create 1. Enter the Name as Input VAT @ 1% 2. Select Duties & Taxes as the group name in the Under field 3. Select VAT from the Type of Duty/Tax list in the field Type of Duty/Tax 12
  17. 17. Processing Purchases & Sales Entries 4. Select Input VAT @ 1% in the VAT/Tax Class field from the VAT/Tax Class list displayed Figure 2.3 Input VAT – VAT/Tax Class Selection 5. The option Inventory values are affected is set to No by default 6. The Percentage of Calculation and Method of Calculation will be displayed based on the VAT/Tax Class selected 7. Select the required Rounding Method from the list displayed 8. Press Y or Enter to accept and save. Similarly, create the following input VAT ledgers: Name Under Type of VAT/Tax Inventory values Percentage of Method of Group Duty/Tax Class are affected Calculation Calculation Input VAT Duties VAT Input VAT No 2% On VAT @ 2% & Taxes @ 2% Rate Input VAT Duties VAT Input VAT No 4% On VAT @ 4% & Taxes @ 4% Rate Input VAT Duties VAT Input VAT No 12.5% On VAT @ 12.5% & Taxes @ 12.5% Rate 13
  18. 18. Processing Purchases & Sales Entries iii. Freight Charges To create a ledger for packing charges, Go to Gateway of Tally > Accounts Info > Ledgers > Create 1. Enter the Name as Freight Charges 2. Select Direct Expenses as the group name in the Under field 3. The option Inventory values are affected is set to No by default 4. Set the option Use for Assessable Value Calculation to Yes 5. In the Apportion for field select VAT and set the Method of Apportion to Based on Quantity Figure 2.4 Freight Charges Ledger 6. Press Y or Enter to accept and save. 14
  19. 19. Processing Purchases & Sales Entries In the ledgers grouped under Direct/Indirect Expenses, Direct/Indirect Incomes, Purchase Accounts and Sales Accounts, the fields Use for Assessable Value Calculation will be displayed. On enabling this field, the options Apportion for and Method of Apportion will be displayed. In the Apportion for field: The option VAT will be displayed when only VAT feature is enabled. Excise & VAT and VAT will be displayed on enabling both Excise and VAT features. On selecting the Method of Apportion as VAT, the value of these ledgers apportioned towards assessable value will be considered for VAT calculation. On selecting the Method of Apportion as Excise & VAT, the value of these ledgers apportioned towards assessable value will be used for Excise and VAT calculation. iv. Creating a Sundry Creditor Ledger To create a Sundry Creditor (Supplier) ledger, Go to Gateway of Tally > Accounts Info. > Ledger > Create Click on F12: Configure button and set the field Use ADDRESSES for Ledger Accounts to Yes. In the Ledger creation screen, 1. Enter the Name as Excel Traders 2. Select Sundry Creditors in the Under field 3. Set Maintain balances bill-by-bill to Yes and enter the Default Credit Period if any 4. In the Mailing Details section The Name will be displayed as Excel Traders Enter the Address details Select the State as Tamil Nadu and enter the PIN Code 15
  20. 20. Processing Purchases & Sales Entries 5. In the Tax Information section enter the PAN / IT number and enable Set/Alter VAT Details field as shown: Figure 2.5 Sundry Creditor – Excel Traders 6. In the VAT Details screen, enter the TIN/Sales Tax Number as shown: Figure 2.6 VAT Details – Sundry Creditor Ledger 7. Accept the VAT Details screen 8. Accept the Sundry Creditor Ledger Creation screen. v. Creating VAT Commodity To create a VAT Commodity Go to Gateway of Tally > Inventory Info. > VAT Commodity > Create 1. Enter the Name of VAT Commodity as Air Conditioner 16
  21. 21. Processing Purchases & Sales Entries 2. In the Used for field, select VAT Figure 2.7 VAT Commodity Creation – VAT 3. In the VAT section, enter the Commodity Code, Schedule Number and Schedule Serial Number as shown: Figure 2.8 VAT Commodity Creation screen 4. Enter the Notes if required and accept the VAT Commodity Creation screen. In the Inventory Info. menu, the commodity code or tariff classification can be created from: VAT Commodity sub-menu for VAT enabled companies Tariff/VAT Commodity sub-menu for companies in which both VAT and Excise feature/excise rules for invoicing is enabled. In Commodity Creation screen, the HSN code can be entered only when the Used for option is selected as Both or Excise only. If VAT is selected, the cursor will skip the HSN Code and prompt for information under VAT details section. 17
  22. 22. Processing Purchases & Sales Entries Similarly, create the following VAT Commodities: VAT Sl. Name Used For Commodity Schedule Number Schedule No. Code Serial Number 1 GI Pipes VAT 2100 First Schedule – Part B 100 2 Insulators VAT 2069 First Schedule – Part B 69 3 Vacuum Cleaners VAT 329 First Schedule – Part C 28 4 Silk Fabrics VAT 2127 First Schedule – Part B 127 vi. Stock Items To create a stock item, Go to Gateway of Tally > Inventory Info. > Stock Items > Create 1. Enter the Name as Gold Jewellery 2. Select the group as Primary in the Under field 3. Select the unit of measurement as Nos in the Units field. (The Unit of Measure can be cre- ated by using the key combination Alt+C in the Units field) 4. In the Commodity field, select the VAT Commodity as Gold Jewellery. The VAT Commodity Code will also be displayed along with the Commodity Name in the List of VAT Commodities as shown: Figure 2.9 Stock Item Creation – Selection of VAT Commodity 18
  23. 23. Processing Purchases & Sales Entries 5. Enter the Rate of VAT as 12.5%. The completed stock item creation screen displays as shown: Figure 2.10 Stock Item Creation screen 6. Press Y or Enter to accept and save. Similarly, create the other stock items as per the details given below: VAT Details Sl. No Name Under Units Commodity Rate of VAT 1 GI Pipes Primary Nos GI Pipes 2% 2 Insulators Primary Nos Insulators 4% 3 Vacuum Cleaners Primary Nos Vacuum Cleaners 12.5% 4 Silk Fabrics Primary Nos Silk Fabrics 4% In the Stock Item master of a company enabled only for VAT, the cursor will skip the Tariff Classification field and prompt for entering the Rate of Duty and selection of Commodity under VAT Details section. The commodity code will be captured in the VAT Annexures based on the selection made from the: List of Tariff Classifications (on enabling Excise and VAT) of Tariff/VAT Commodity screen List of VAT Commodities of VAT Commodity screen The HSN code will not be captured in the Annexures. 19
  24. 24. Processing Purchases & Sales Entries Step 2: Let us now enter the purchase transaction in Tally.ERP 9 To create Purchase Voucher, Go to Gateway of Tally > Accounting Vouchers > F9: Purchase In F12: Purchase Invoice Configuration, set Use Common Ledger A/c for Item Allocation to No 1. Select As Invoice mode (use key combination Ctrl+V if the screen is displayed in voucher mode. The invoice mode will be displayed) 2. Enter the reference number in the Ref. field 3. Select Excel Traders in the Party’s A/c Name field from the List of Ledger Accounts 4. In the Party Details screen, enter/modify the required details 5. Select the Name of Item as Gold Jewellery from the List of Items 6. Enter the Quantity as 10 and Rate as 20,000. The value is automatically displayed in the Amount field 7. In the Accounting Details screen, select Purchases @ 1% from the List of Ledger Accounts. The VAT/Tax Class will automatically be displayed as Purchases @ 1% 8. Select the next stock item as G I Pipes. Enter the Quantity as 200 and Rate as 150 9. In the Accounting Details screen, select Purchases @ 2% from the List of Ledger Accounts. The VAT/Tax Class will automatically be displayed as Purchases @ 2% 10. Select the next stock item as Insulators. Enter the Quantity as 200 and Rate as 320 11. In the Accounting Details screen, select Purchases @ 4% from the List of Ledger Accounts. The VAT/Tax Class will automatically be displayed as Purchases @ 4% 12. Select the next stock item as Silk Fabrics. Enter the Quantity as 10 and Rate as 5,000 13. In the Accounting Details screen, select Purchases @ 4% from the List of Ledger Accounts. The VAT/Tax Class will automatically be displayed as Purchases @ 4% 14. Select the next stock item as Vacuum Cleaner. Enter the Quantity as 15 and Rate as 15,000 15. In the Accounting Details screen, select Purchases @ 12.5% from the List of Ledger Accounts. The VAT/Tax Class will automatically be displayed as Purchases @ 12.5% 16. Select Freight Charges ledger and enter the amount as 5,000 17. Select the ledgers Input VAT @ 1%, Input VAT @ 2%, Input VAT @ 4% and Input VAT @ 12.5% and the respective values will be automatically calculated 20
  25. 25. Processing Purchases & Sales Entries 18. Set the field Show Statutory Details to Yes Figure 2.11 Purchase Invoice – Show Statutory Details 21
  26. 26. Processing Purchases & Sales Entries 19. Press Enter to view the Statutory Details screen Figure 2.12 Purchase Invoice – Statutory Details screen 20. Accept the Statutory Details screen 21. Accept the default Bill allocations in the Bill-wise Details screen 22
  27. 27. Processing Purchases & Sales Entries 22. Enter the Narration if required Figure 2.13 Purchase Invoice – Taxable Goods 23. Press Y or Enter to accept and save. In a transaction where Cash Ledger is selected in the Party’s A/c Name field, the required party ledger can be selected in the Supplementary Details screen by using the Alt+M: Party List button. On selecting the party ledger, the Address and the TIN/Sales Tax Number will be captured from the ledger master and displayed. The TIN and address will be displayed in Annexure I and II. 2.1.2 Purchase Returns In cases where the purchasing dealer has returned the goods to the seller for any reason, the input tax credit already claimed on the purchase by the dealer shall be liable to reversal of tax credit on such goods returned, in the manner as may be prescribed. Example 2: On 3-4-2009, M/s National Traders returned 10 damaged insulators worth Rs. 320 each to Excel Traders against the purchase dated 1-4-2009 vide invoice number 01. 23
  28. 28. Processing Purchases & Sales Entries Step 1: Let us record the transaction in Tally.ERP 9 To create a debit note for purchase returns, In F11: Features > F1: Accounting Features, enable the following options: Use Debit/Credit Notes Use Invoice mode for Debit Notes Go to Gateway of Tally > Accounting Vouchers > Ctrl+F9: Debit Note 1. Press the toggle key Ctrl+V to select the option As Invoice. 2. Enter the reference number in the Ref. field. 3. Select the Purchase Returns Or Rejected flag from list of VAT Adjustments in the field Used For 4. Select Excel Traders in the Party’s A/c Name field from the List of Ledger Accounts 5. In the Party Details screen, enter/modify the required details 6. Select the Name of Item as Insulators from the List of Items. Enter the Quantity as 10, the Rate and Amount will be displayed automatically 7. In the Accounting Details screen, select Purchases @ 4% from the List of Ledger Accounts. The VAT/Tax Class will automatically be displayed as Purchases @ 4% 8. Select Input VAT @ 4% and the value will be automatically calculated and displayed 9. The field Show Statutory Details will be set to No 10. Accept the default Bill allocations in the Bill-wise Details screen 24
  29. 29. Processing Purchases & Sales Entries 11. Enter the Narration, if required Figure 2.14 Debit Note – Purchase Returns 12. Press Y or Enter to accept the voucher. 2.1.3 Sale of Taxable Goods Example 3: On 4-4-2009, National Traders sold the following items to Marvel Traders vide invoice number S01: Item Description Quantity (in Nos) Rate Amount VAT Commodity Code Gold Jewellery 4 22,500 90,000 1% 102 GI Pipes 160 380 60,800 2% 2100 Insulators 150 500 75,000 4% 2069 Vacuum Cleaner 8 17,500 1,40,000 12.5% 329 An amount of Rs. 6,500 was charged as packing charges which was included in the invoice. 25
  30. 30. Processing Purchases & Sales Entries Step 1: Let us create the required Masters to record the above transaction. Creating Ledgers i. Sales Ledger To create a sales Ledger Go to Gateway of Tally > Accounts Info > Ledgers > Create 1. Enter the Name as Sales @ 1% 2. Select Sales Accounts as the account group in the Under field 3. Set Inventory values are affected to Yes 4. Set the option Used In VAT Returns to Yes to display the VAT/Tax Class sub-screen Figure 2.15 Sales Ledger – Used In VAT Returns 26
  31. 31. Processing Purchases & Sales Entries 5. Select Sales @ 1% as the VAT/Tax Class from the list of VAT/Tax Class Figure 2.16 Sales Ledger – VAT/Tax Class Selection 6. Press Enter to return to the Sales @ 1% ledger creation screen 7. Set the option Use for Assessable Value Calculation to No 8. Press Y or Enter to accept and save. Similarly, create the following purchase ledgers: Name Under Inventory Used in VAT/Tax Class Use for Assessable Group values are VAT Value Calculation affected Returns Sales @ 2% Sales Yes Yes Sales @ 2% No Accounts Sales @ 4% Sales Yes Yes Sales @ 4% No Accounts Sales @ 12.5% Sales Yes Yes Sales @ 12.5% No Accounts 27
  32. 32. Processing Purchases & Sales Entries ii. Output VAT on Sales Ledger To create an Output VAT ledger, Go to Gateway of Tally > Accounts Info. > Ledgers > Create 1. Enter the Name as Output VAT @ 1% 2. Select Duties & Taxes as the group name in the Under field 3. Select VAT from the Type of Duty/Tax list in the field Type of Duty/Tax 4. Select Output VAT @ 1% in the VAT/Tax Class field from the VAT/Tax Class list displayed Figure 2.17 Output VAT – VAT/Tax Class Selection 5. The option Inventory values are affected is set to No by default 6. The Percentage of Calculation and Method of Calculation will be displayed based on the VAT/Tax Class selected 7. Select the required Rounding Method from the list displayed 8. Press Y or Enter to accept and save. 28
  33. 33. Processing Purchases & Sales Entries Similarly, create the following input VAT ledgers: Name Under Type of VAT/Tax Inventory Percentage of Method of Group Duty/Tax Class values are Calculation Calculation affected Output VAT Duties VAT Output VAT No 2% On VAT @ 2% & Taxes @ 2% Rate Output VAT Duties VAT Output VAT No 4% On VAT @ 4% & Taxes @ 4% Rate Output VAT Duties VAT Output VAT No 12.5% On VAT @ 12.5% & Taxes @ 12.5% Rate iii. Packing Charges To create a ledger for packing charges, Go to Gateway of Tally > Accounts Info > Ledgers > Create 1. Enter the Name as Packing Charges 2. Select Indirect Income as the group name in the Under field 3. The option Inventory values are affected is set to No by default 4. Set the option Use for Assessable Value Calculation to Yes 5. In the Apportion for field select VAT and set the Method of Apportion to Based on Quantity Figure 2.18 Packing Charges Ledger 6. Press Y or Enter to accept and save. 29
  34. 34. Processing Purchases & Sales Entries iv. Creating a Sundry Debtor Ledger To create a Sundry Debtor (Customer) ledger, Go to Gateway of Tally > Accounts Info. > Ledger > Create Click on F12: Configure button and set the field Use ADDRESSES for Ledger Accounts to Yes. In the Ledger creation screen, 1. Enter the Name as Marvel Traders 2. Select Sundry Debtors in the Under field 3. Set Maintain balances bill-by-bill to Yes and enter the Default Credit Period if any 4. In the Mailing Details section The Name will be displayed as Marvel Traders Enter the Address details Select the State as Tamil Nadu and enter the PIN Code 5. In the Tax Information section enter the PAN number and enable Set/Alter VAT Details Figure 2.19 Sundry Debtor – Marvel Traders 6. Enter the TIN/Sales Tax Number Figure 2.20 Marvel Traders – VAT Details 30
  35. 35. Processing Purchases & Sales Entries 7. Accept the VAT Details screen 8. Accept the Sundry Debtor ledger. Step 2: Let us enter the transaction in Tally.ERP 9. To create a sales invoice, Go to Gateway of Tally > Accounting Vouchers > F8: Sales 1. Enter the reference in the Ref. field, if required. 2. Select Marvel Traders in the Party’s A/c Name field from the List of Ledger Accounts. 3. Enter the Despatch Details in the Party Details screen 4. Select the Name of Item as Gold Jewellery from the List of Items 5. Enter the Quantity as 4 and Rate as 22,500. The value is automatically displayed in the Amount field 6. In the Accounting Details screen, select Sales @ 1% from the List of Ledger Accounts. The VAT/Tax Class will automatically be displayed as Sales @ 1% 7. Select the next stock item as G I Pipes. Enter the Quantity as 160 and Rate as 380 8. In the Accounting Details screen, select Sales @ 2% from the List of Ledger Accounts. The VAT/Tax Class will automatically be displayed as Sales @ 2% 9. Select the next stock item as Insulators. Enter the Quantity as 150 and Rate as 500 10. In the Accounting Details screen, select Sales @ 4% from the List of Ledger Accounts. The VAT/Tax Class will automatically be displayed as Sales @ 4% 11. Select the next stock item as Vacuum Cleaner. Enter the Quantity as 8 and Rate as 17,500 12. In the Accounting Details screen, select Sales @ 12.5% from the List of Ledger Accounts. The VAT/Tax Class will automatically be displayed as Sales @ 12.5% 13. Select Packing Charges ledger and enter the amount as 6,500 14. Select the ledgers Output VAT @ 1%, Output VAT @ 2%, Output VAT @ 4% and Output VAT @ 12.5% and the respective values will be automatically calculated and displayed 31
  36. 36. Processing Purchases & Sales Entries 15. Set the field Show Statutory Details as Yes Figure 2.21 Sales Invoice – Show Statutory Details Field 32
  37. 37. Processing Purchases & Sales Entries 16. In the Statutory Details click on Alt+F1: Detailed mode and the screen displays as shown: Figure 2.22 Sales Invoice – Statutory Details screen 17. Accept the Statutory Details screen 18. Accept the default Bill allocations in the Bill-wise Details screen 33
  38. 38. Processing Purchases & Sales Entries 19. Enter the Narration if required Figure 2.23 Sales Invoice – Completed 20. Press Y or Enter to accept the voucher. 21. Press Pg Up key to view the sales invoice in alteration mode 22. Click on Alt+P: Print button and select Yes in the Voucher Printing screen to print the invoice 34
  39. 39. Processing Purchases & Sales Entries The print preview of the taxable sales invoice displays as shown: Figure 2.24 Print Preview of Sales Invoice 35
  40. 40. Processing Purchases & Sales Entries 2.1.4 Sales Returns Where a selling dealer has received back the goods as a result of sales return or unfructified sale, the output tax paid or payable thereon will be reduced, adjusted or refunded in the manner as may be prescribed. Example 4: On 6-4-2009, M/s National Traders received 15 nos of G I Pipes returned by Marvel Traders against the sales dated 4-4-2009 vide invoice number S01. Step 1: Let us record the transaction in Tally.ERP 9 To create a credit note for sales returns, In F11: Features > F1: Accounting Features, enable the option Use Invoice mode for Credit Notes Go to Gateway of Tally > Accounting Vouchers > Ctrl+F8: Credit Note 1. Press the toggle key Ctrl+V to select the option As Invoice. 2. Enter the reference number in the Ref. field. 3. Select the Goods Sold Returned flag from list of VAT Adjustments in the field Used For 4. Select Marvel Traders in the Party’s A/c Name field from the List of Ledger Accounts 5. In the Party Details screen, enter/modify the required details 6. Select the Name of Item as G I Pipes from the List of Items. Enter the Quantity as 15, the Rate and Amount will be displayed automatically 7. In the Accounting Details screen, select Sales @ 2% from the List of Ledger Accounts. The VAT/Tax Class will automatically be displayed as Sales @ 2% 8. Select Output VAT @ 2% and the value will be automatically calculated and displayed 9. The field Show Statutory Details will be set to No 10. Accept the default Bill allocations in the Bill-wise Details screen 36
  41. 41. Processing Purchases & Sales Entries 11. Enter the Narration, if required Figure 2.25 Credit Note – Sales Returns 12. Press Y or Enter to accept the voucher. 2.2 Purchase and Sale of Exempt Goods Exempted Sales refers to the sale of goods which are exempted from VAT by notification, from time to time. 2.2.1 Exempted Purchases Example 5: On 3-4-2009, National Traders purchased 200 nos of the periodical – The IT Journal for Rs. 150 each from M/s. Swasthik Associates, Chennai vide invoice number 02. Step 1: Let us create the required Masters to record the above transaction. 37
  42. 42. Processing Purchases & Sales Entries Creating Ledgers i. Purchases – Exempt Ledger Go to Gateway of Tally > Accounts Info > Ledgers > Create Create the Purchases – Exempt Ledger with the following details: Name Under Inventory Used in VAT/Tax Class Use for Assessable values are VAT Value Calculation affected Returns Purchases – Purchases Yes Yes Purchases – No Exempt Accounts Exempt ii. Creating a Sundry Creditor Ledger Create the sundry creditor ledger – Swasthik Associates by following the steps given in Example 1. iii. VAT Commodity Create the VAT Commodity with the details given in the following table: VAT Sl. Name Used For Commodity Schedule Number Schedule No. Code Serial Number 1 Periodicals VAT 711 Fourth Schedule – Part B 11 iv. Stock Item – The IT Journal Create the stock item with the details as given in the following table: VAT Details Name Under Units Commodity Rate of VAT The IT Journal Primary Nos Periodicals 0% Step 2: Let us record the transaction in Tally.ERP 9 To create a purchase exempt voucher, Go to Gateway of Tally > Accounting Vouchers > F9: Purchases In the F12: Purchase Invoice Configuration, set the option Use Common Ledger A/c for Item Allocation to Yes 1. Enter the reference number in the Ref field 2. Select the Party’s A/c Name as Swasthik Associates from the List of Ledger Accounts. 38
  43. 43. Processing Purchases & Sales Entries 3. Select Purchases – Exempt ledger from the List of Ledger Accounts. 4. On selecting the Purchase – Exempt Ledger, the VAT/Tax Class appears as Purchases – Exempt automatically 5. Select the Name of Item as The IT Journal from the List of Items 6. Enter the Quantity as 200 and Rate as 150. The amount is automatically displayed in the Amount field 7. The field Show Statutory Details will be set to No 8. Accept the default Bill allocations in the Bill-wise Details screen 9. Enter the Narration if required 10.The completed Purchases Voucher screen is displayed as shown: Figure 2.26 Purchase – Exempt Invoice 11. Press Y or Enter to accept. 2.2.2 Exempted Sales Example 6: On 6-4-2009, National Traders sold 180 nos of The IT Journal for Rs. 200 to Supreme Book Stores, Chennai vide invoice number S02. 39
  44. 44. Processing Purchases & Sales Entries Step 1: Let us create the necessary masters to record the above transaction. Creating Ledgers i. Sales – Exempt To create a Sales – Exempt Ledger Go to Gateway of Tally > Accounts Info > Ledgers > Create Create the Sales – Exempt Ledger with the following details: Name Under Inventory Used in VAT/Tax Class Use for values are VAT Assessable affected Returns Value Calculation Sales – Exempt Sales Accounts Yes Yes Sales – Exempt No ii. Sundry Debtor Ledger Create the sundry debtor ledger by following the steps given in Example 3. Step 2: Let us record the transaction in Tally.ERP 9 1. Enter the reference number in the Ref field 2. Select the Party’s A/c Name as Supreme Books Store from the List of Ledger Accounts. 3. Select Sales – Exempt ledger from the List of Ledger Accounts. 4. On selecting the Sales – Exempt Ledger, the VAT/Tax Class appears as Sales – Exempt automatically 5. Select the Name of Item as The IT Journal from the List of Items 6. Enter the Quantity as 180 and Rate as 200. The amount is automatically displayed in the Amount field 7. The field Show Statutory Details will be set to No 8. Accept the default bill allocations in the Bill-wise Details screen 9. Enter the Narration if required 40
  45. 45. Processing Purchases & Sales Entries 10.The completed Sales Voucher screen is displayed as shown: Figure 2.27 Sales – Exempt Invoice 11. Press Y or Enter to accept. 2.2.3 Sales Returns Example 7: On 7-4-2009, M/s National Traders received 10 nos of The IT Journal sold to Supreme Book Stores on 6-4-2009 vide invoice number 02. Step 1: Let us record the transaction in Tally.ERP 9 To create a credit note for sales returns, Go to Gateway of Tally > Accounting Vouchers > Ctrl+F8: Credit Note 1. Enter the reference number in the Ref. field. 2. Select the Goods Sold Returned flag from list of VAT Adjustments in the field Used For 3. Select Supreme Book House in the Party’s A/c Name field from the List of Ledger Accounts 4. In the Party Details screen, enter/modify the required details 41
  46. 46. Processing Purchases & Sales Entries 5. Select the Name of Item as The IT Journal from the List of Items. Enter the Quantity as 10, the Rate and Amount will be displayed automatically 6. In the Accounting Details screen, select Sales – Exempt from the List of Ledger Accounts. The VAT/Tax Class will automatically be displayed as Sales – Exempt 7. The field Show Statutory Details will be set to No 8. Accept the default Bill allocations in the Bill-wise Details screen 9. Enter the Narration, if required Figure 2.28 Credit Note – Sales Returns 10. Press Y or Enter to accept the voucher. 2.3 Inter-state Purchases and Sales A registered CST dealer purchases and sells goods outside the state and pays the CST (Central Sales Tax). Generally, the CST paid on purchases from outside the state (i.e., Inter-state Pur- chases) is neither allowed to set-off against Output VAT (VAT collected on Sales within the state) payable nor against Output CST (CST collected on Inter-state Sales) payable. Thus, the CST paid on Inter-state purchases is treated as part of procurement cost or the cost of purchases. However, in case of Inter-state Sales, ‘Input VAT’ can be adjusted against ‘Output CST’ payable during the month. The assessable value of inter-state purchases and sales turnover, CST paid and collected on the inter-state transactions are captured and reported separately in Annexures and CST Returns. 42
  47. 47. Processing Purchases & Sales Entries 2.3.1 Inter-state Purchases Example 8: On 8-4-2009, M/s National Traders purchased 15 nos of Air Conditioners from Sunlite Enter- prises, Mumbai for Rs. 25,000 each vide Invoice No. 03, by issuing C Form. CST @ 2% was charged while invoicing. Step 1: Let us create the necessary masters to record the above transaction: i. Inter-State Purchases Ledger Create the inter-state purchase ledger with the details as given in the following table: Ledger Under Group Inventory Values Used in VAT VAT/Tax Class are affected Returns Inter-state Purchase Accounts Yes Yes Inter-State Purchases Purchases ii. Input CST Ledger Create the input CST ledger with the details as given in the following table: Name Under Type of VAT/Tax Inventory values Percentage of Method of Group Duty/Tax Class are affected Calculation Calculation Input Duties CST Not Appli- No 2% On Total CST & Taxes cable Sales iii. Sundry Creditor Ledger Create the sundry creditor ledger – Sunlite Enterprises by following the steps given in Example 1. iv. VAT Commodity Creation Create the VAT Commodity with the following details: VAT Sl. Name Used For Commodity Schedule Number Schedule No. Code Serial Number 1 Air Conditioners VAT 304 First Schedule – Part C 3 v. Stock Item – Air Conditioner Create the stock item with the details as given in the following table: VAT Details Name Under Units Commodity Rate of VAT Air Conditioner Primary Nos Air Conditioners 12.5% 43
  48. 48. Processing Purchases & Sales Entries Step 2: Let us enter the purchase transaction in Tally.ERP 9 Go to Gateway of Tally > Accounting Vouchers > F9: Purchase 1. Enter the reference number in the Ref. field 2. Select Sunlite Enterprises in the Party’s A/c Name field from the List of Ledger Accounts 3. In the Party Details screen, enter/modify the required details 4. Select Inter-state Purchase ledger in the Purchase Ledger field from the List of Ledger Accounts 5. On selecting the Inter-state Purchase ledger, the VAT/Tax Class appears as Inter – State Purchases 6. Select the Name of Item as Air Conditioner from the List of Items 7. Enter the Quantity as 15 and Rate as 25,000. The value is automatically displayed in the Amount field 8. Select Input CST ledger from the List of Ledger Accounts and the rate appears as 2%. The amount of CST will get calculated automatically and will form part of the purchase cost. 9. Select Form C as Form to Issue. Enter the Form number and Date 10. The field Show Statutory Details will be set to No 11. Accept the default Bill Allocation in the Bill-wise Details screen 12. Enter the Narration if required Figure 2.29 Inter-State Purchase Invoice 13. Press Y or Enter to accept and save. 44
  49. 49. Processing Purchases & Sales Entries 2.3.2 Inter-state Sales Example 9: On 9-4-2009, M/s National Traders sold 5 Nos. of Air Conditioners to Digilink Electronics, Hyderabad for Rs. 28,000 each vide Invoice No. S03 against Form C. Packing charges amounted to Rs. 4,500. CST @ 2% was charged while invoicing. Step 1: Let us create the necessary masters to record the above transaction: i. Inter-State Sales Ledger Create the inter-state sales ledger with the details as given in the following table: Ledger Under Inventory Values Used in VAT VAT/Tax Class are affected Returns Inter-state Sales Sales Accounts Yes Yes Inter-State Sales ii. CST @ 2% Ledger Create the CST @ 2% ledger with the details as given in the following table: Ledger Under Type of VAT/Tax Inventory Percentage Method of Duty /Tax Class Values are of calcula- Calcula- affected tion tion CST @ 2% Duties CST Inter-State No 2% On Total & Taxes Sales Sales iii. Sundry Debtor Ledger Create the sundry debtor ledger – Digilink Electronics by following the steps given in Example 3. Step 2: Let us now enter the sales transaction in Tally.ERP 9 To create an Interstate Sale Voucher, Go to Gateway of Tally > Accounting Vouchers > F8: Sales 1. Enter the reference in the Ref. field 2. Select Digilink Electronics in the Party’s A/c Name field from the List of Ledger Accounts 3. In the Party Details screen, enter the required details 4. Select Inter-state Sales ledger in the Sales Ledger field from the List of Ledger Accounts 5. On selecting the Inter-state Sales, the VAT/Tax Class appears as Inter – State Sales 6. Select the Name of Item as Air Conditioner from the List of Items 7. Enter the Quantity as 5 and Rate as 28,000. The amount is automatically displayed in the Amount field. 45
  50. 50. Processing Purchases & Sales Entries 8. Select Packing Charges from the List of Ledger Accounts and enter the amount as 5,000 9. Select CST @ 2% and the amount is automatically calculated 10. Set the option Is Declared Goods Sales to No 11. Select Form C as Form to Receive Figure 2.30 Inter-State Sales Invoice – Selection of C Form 12. The Form number and Date fields will be displayed on selecting the Form to Receive from the Form Types list 13. Enter the Form number and Date 14. The field Show Statutory Details will be set to No 15. Accept the default Bill allocations in the Bill-wise Details screen 46
  51. 51. Processing Purchases & Sales Entries 16. Enter Narration if required Figure 2.31 Sales Invoice – Sales Against C Form 17. Press Y or Enter to accept and save. 2.3.3 Inter-state Sales under Sec. 10 As per TN VAT Act, the sales turnover made by a dealer in the course of inter-state trade or commerce to the government or a registered dealer other than the government, in respect of the following goods, are required to be reported separately in the box provided in the Form – I. Goods intended for re-sale or notified by the Central Government, for use by the dealer in the manufacture or processing of goods for sale or the telecommunications network or in mining or in the generation or distribution of electricity or any other form of power Containers or other materials intended for use in packing of goods for sale Example 10: On 10-4-2009, M/s National Traders sold 8 Nos. of Silk Fabrics to Fortune Agencies, Ahmedabad for Rs. 8,000 each vide invoice number S04. 47
  52. 52. Processing Purchases & Sales Entries Step 1: Let us create the necessary masters to record the above transaction: i. Inter-State Sales Ledger for Special Category Goods Create the inter-state sales ledger for special category goods with the details as given in the following table: Ledger Under Inventory Values Used in VAT VAT/Tax Class are affected Returns Inter-state Sales Sales Yes Yes Inter-State Sales – – Spl Category Accounts Spl. Category Goods ii. Sundry Debtor Ledger Create the sundry debtor ledger – Fortune Agencies by following the steps given in Example 3. Step 2: Let us enter the transaction in Tally.ERP 9 To create an entry for Inter-State Sale of Special Category goods, Go to Gateway of Tally > Accounting Vouchers > F8: Sales 1. Enter the reference in the Ref. field 2. Select the Party’s A/c Name as Fortune Agencies from the List of Ledger Accounts 3. Enter the Despatch Details in the Party Details screen 4. Select Inter-State Sales – Spl Category ledger in the Sales Ledger field from the List of Ledger Accounts 5. On selecting the Inter-State Sales – Spl Category, the VAT/Tax Class appears as Inter-State Sales–Spl. Category Goods from the VAT/Tax Class list 6. Select the Name of Item as Silk Fabrics 7. Enter the Quantity as 8 and Rate as 8,000. The value is automatically displayed in the Amount field 8. Select CST @ 2% ledger and the amount will be automatically displayed 9. Set the option Is Declared Goods Sales to Yes 10. Set Forms to Receive as Not Applicable 11. The field Show Statutory Details will be set to No 12. Accept the default Bill allocations in the Bill-wise Details screen 48
  53. 53. Processing Purchases & Sales Entries 13. Enter the details in the Narration field, if required Figure 2.32 Sales Invoice – Sale of Special Category Goods 14. Press Y or Enter to accept and save. 2.4 Purchase from Un-registered Dealers Example 11: On 11-4-2009, M/s National Traders purchased the goods from Gizmo Electronics vide invoice number 04, the details of which are as given below: Item Description Quantity (in Nos) Rate Amount VAT Gold Jewellery 2 20,000 40,000 1% Insulators 5 320 1,600 4% Vacuum Cleaner 3 15,000 45,000 12.5% On the same day, M/s National Traders recorded a journal adjustment entry to account for the input tax credit on purchase from URD. 49
  54. 54. Processing Purchases & Sales Entries Step 1: Let us create the required Masters to record the above transaction. Creating Ledgers i. Ledgers for Purchases From URDs Name Under Inventory Used in VAT/Tax Class Use for Assessable Group values are VAT Value Calculation affected Returns Purchases Purchase Yes Yes Purchases From No from URDs @ Accounts URDs – Taxable 1% Goods @ 1% Purchases Purchase Yes Yes Purchases From No from URDs @ Accounts URDs – Taxable 4% Goods @ 4% Purchases Purchase Yes Yes Purchases From No from URDs @ Accounts URDs – Taxable 12.5% Goods @ 12.5% ii. Ledger for Tax Paid on Purchases made from URDs Name Under Inventory Used in VAT/Tax Class Use for Assessa- Group values are VAT ble Value Calcula- affected Returns tion Tax Paid on Purchase Yes Yes Purchases From No URD Purchases Accounts URDs – Taxable @ 1% Goods @ 1% Tax Paid on Purchase Yes Yes Purchases From No URD Purchases Accounts URDs – Taxable @ 4% Goods @ 4% Tax Paid on Purchase Yes Yes Purchases From No URD Purchases Accounts URDs – Taxable @ 12.5% Goods @ 12.5% iii. Sundry Creditor Ledger Create the sundry creditor ledger – Gizmo Electronics by following the steps given in example 1. iv. Enabling VAT Adjustments in Journal Voucher Type To create a VAT Adjustment class for journal vouchers, Go to Gateway of Tally > Accounts Info. > Voucher Types > Alter > Journal 50
  55. 55. Processing Purchases & Sales Entries 1. In the Voucher Type Alteration screen, enter the Name of Class as VAT Adjustment Class Figure 2.33 Journal Voucher Type – Voucher Class 2. Press Enter to view the Voucher Type Class screen 3. Set Use Class for VAT Adjustments to Yes Figure 2.34 Voucher Type Class screen 4. Accept the Voucher Type Class screen and return to the Voucher Type Alteration screen 5. Press Y or Enter to accept and save. Step 2: Let us record the transaction in Tally.ERP 9. i. Purchase voucher for Taxable Goods purchased from URDs Go to Gateway of Tally > Accounting Vouchers > F9: Purchases In F12: Purchase Invoice Configuration set Use Common Ledger A/c for Item Allocation to No 1. Enter the reference number in the Ref field 2. Select the Party’s A/c Name as Gizmo Electronics from the List of Ledger Accounts 3. Select the Name of Item as Gold Jewellery from the List of Items 4. Enter the Quantity as 2 and Rate as 20,000. The amount is automatically displayed in the Amount field. 51
  56. 56. Processing Purchases & Sales Entries 5. In the Accounting Details screen, select Purchases from URDs @ 1% from the List of Ledger Accounts. The VAT/Tax Class will automatically be displayed as Purchases From URDs – Taxable Goods @ 1% 6. Select the next stock item as Insulators. Enter the Quantity as 5 and Rate as 320 7. In the Accounting Details screen, select Purchases from URDs @ 4% from the List of Ledger Accounts. The VAT/Tax Class will automatically be displayed as Purchases From URDs – Taxable Goods @ 4% 8. Select the next stock item as Vacuum Cleaner. Enter the Quantity as 3 and Rate as 15,000 9. In the Accounting Details screen, select Purchases from URDs @ 12.5% from the List of Ledger Accounts. The VAT/Tax Class will automatically be displayed as Purchases From URDs – Taxable Goods @ 12.5% 10. The field Show Statutory Details will be set to No 11. Accept the default Bill allocations in the Bill-wise Details screen 12. Enter the details in the field Narration, if required Figure 2.35 Purchase Invoice – Purchase from URDs 13. Press Y or Enter to accept and save. ii. Journal Adjustment Entry to Account for Tax on Purchase from URDs Let us record the transaction in Tally.ERP 9. 52
  57. 57. Processing Purchases & Sales Entries To create a journal adjustment entry to account for tax on purchase from URDs, Go to Gateway of Tally > Accounting Vouchers > F7: Journal 1. Select Tax on URD Purchase as the VAT Adjustment Class in the Used for field 2. Debit the ledger – Tax Paid on URD Purchases @ 1%. In the VAT Class Details screen, the VAT/Tax Class will be displayed as Purchase From URDs – Taxable Goods @ 1%, enter the Assessable value as 40,000 3. Enter the amount as 400 (i.e., 40,000*1% VAT) in the debit field 4. Similarly, debit the ledger – Tax Paid on URD Purchases @ 4%. In the VAT Class Details screen, the VAT/Tax Class will be displayed as Purchase From URDs – Taxable Goods @ 4%, enter the Assessable value as 1,600 5. Enter the amount as 64 (i.e., 1,600*4% VAT) 6. Debit the ledger – Tax Paid on URD Purchases @ 12.5%. In the VAT Class Details screen, the VAT/Tax Class will be displayed as Purchase From URDs – Taxable Goods @ 12.5%, enter the Assessable value as 45,000 7. Enter the amount as 5,625 (i.e., 45,000*12.5% VAT) 8. Credit Output VAT @ 1% ledger. 9. In the VAT Class Details screen, Output VAT @ 1% will be displayed in the VAT/Tax Class field. Enter the Assessable value as 40,000. 10.Select the required commodity. Any number of Commodities can be selected in the Commod- ity Name field and assessable value can be specified for each such that the total tax value matches with the amount debited. 11.Here select the Commodity as Jewellery with Assessable Value of 40,000. Tax amount will be automatically calculated and displayed. Figure 2.36 VAT Class Details screen 12.Enter the credit amount as 400 13.Similarly, credit Output VAT @ 4% ledger. 14.In the VAT Class Details screen, Output VAT @ 4% will be displayed in the VAT/Tax Class field. Enter the Assessable value as 1,600. 15.Select the Commodity as Insulators with Assessable Value of 1,600. The Tax amount will be automatically calculated and displayed 16.Enter the credit amount as 64 17.Credit Output VAT @ 12.5% ledger. 18.In the VAT Class Details screen, Output VAT @ 12.5% will be displayed in the VAT/Tax Class field. Enter the Assessable value as 45,000. 19.Select the Commodity as Insulators with Assessable Value of 45,000. The Tax amount will be automatically calculated and displayed 20.The credit amount will be automatically displayed 53
  58. 58. Processing Purchases & Sales Entries 21.Enter the Narration if required Figure 2.37 Journal Voucher – Tax on URD Purchase 22. Press Y or Enter to accept and save. 2.5 Exports Example 12: On 13-4-2009, M/s National Traders sold the following items to Zeta Electronics, New York vide invoice number S05. Item Description Quantity (in Nos) Rate (in ‘$’) Amount (in ‘$’) Gold Jewellery 3 740 2,220 Vacuum Cleaners 5 530 2,650 The conversion factor per $ is “1 $ = Rs. 48” On 14-4-2009, M/s National Traders recorded an adjustment entry to account for refund claimed on input VAT paid on exported goods. Step 1: Let us create the necessary ledgers to account for export sales. 54
  59. 59. Processing Purchases & Sales Entries Creating Ledgers i. Exports Ledger Name Under Group Inventory Used in VAT/Tax Class Use for Assessable values are VAT Value Calculation affected Returns Exports Sales Accounts Yes Yes Exports No ii. Refund on Exports Ledger Ledger Under Inventory Use for Assessable Used in VAT values are Value Calculation Returns affected Refund on Exports Indirect Incomes No No No iii. Sundry Debtor Ledger Create the sundry debtor ledger – Zeta Electronics by following the steps given in example 3. iv. Foreign Currency Creation In F11: Features > F1: Accounting Features set Allow Multi-Currency to Yes To create a foreign currency, Go to Gateway of Tally > Accounts Info. > Currencies > Create Symbol Formal Number Show Is Symbol Put a SPACE Decimal Places for Name of Amounts SUFFIXED between Printing Amounts Decimal in Million to Amount and in Words Places Amount Symbol $ US 2 No Yes Yes 2 Dollars Step 2: Let us enter the sales transaction and the adjustment entry in Tally.ERP 9. i. Sales Invoice for Export of Goods To create the Sales voucher for Export of goods, Go to Gateway of Tally > Accounting Vouchers > F8: Sales In F12: Sales Invoice Configuration, set Use Common Ledger A/c for Item Allocation to Yes 1. Enter the reference number in the Ref. field 2. Select Zeta Electronics in the Party’s A/c Name field from the List of Ledger Accounts 55
  60. 60. Processing Purchases & Sales Entries 3. Enter the Despatch Details in the Party Details screen 4. Select the Exports ledger in the Sales Ledger field from the List of Ledger Accounts 5. On selecting the Sales Ledger, the VAT/Tax Class appears as Exports from the VAT/Tax Class list 6. Select the Name of Item as Gold Jewellery from the List of Items 7. Enter the Quantity as 5 and Rate as $740. The Forex Rate of Exchange screen will be dis- played for entering the conversion factor. Enter the details as shown: Figure 2.38 Forex Rate of Exchange screen 8. The value is automatically displayed in the Amount field. 9. Press Enter key to view the VAT TamilnaduExportINV screen 10. Specify the details as shown: Figure 2.39 Exports – Input Tax Details sub-screen for Gold Jewellery 11. Similarly, select the stock item Vacuum Cleaners from the List of Items 12. Enter the Quantity as 5 and Rate as $530. Accept the exchange rate as Rs. 48 per $ 13. The value is automatically displayed in the Amount field. 14. Press Enter key to view the VAT TamilnaduExportINV screen 56
  61. 61. Processing Purchases & Sales Entries 15. Specify the details as shown: Figure 2.40 Exports – Input Tax Details sub-screen for Vacuum Cleaners 16. The field Show Statutory Details will be set to No 17. Enter the details in the field Narration, if required Figure 2.41 Sales – Exports 18. Accept the sales invoice. ii. Journal Adjustment Entry to claim the Refund of Input VAT paid on exported goods To create a journal adjustment entry to account for refund of input tax paid on exported goods, Go to Gateway of Tally > Accounting Vouchers > F7: Journal 1. Select Refund Claimed on Zero Rated Sales as the VAT Adjustment Class in the Used for field 2. Debit the ledger – Refund on Exports and enter 9,975 in the debit field 3. Credit Input VAT @ 1% ledger. 57
  62. 62. Processing Purchases & Sales Entries 4. In the VAT Class Details screen, the VAT/Tax Class will be displayed as Input VAT @ 1%, enter the Assessable value as 60,000 5. Enter the amount as 600 (i.e., 60,000*1% VAT) 6. Debit the ledger – Input VAT @ 12.5%. In the VAT Class Details screen, the VAT/Tax Class will be displayed as Input VAT @ 12.5%, enter the Assessable value as 75,000 7. The amount will be automatically displayed as 9,375 (i.e., 75,000*12.5% VAT) 8. Enter the Narration if required Figure 2.42 Journal Voucher – Refund Claimed on Zero Rated Sales 9. Press Y or Enter to accept and save. 2.6 Import Example 13: On 15-4-2009, M/s National Traders imported 25 nos of Insulators for $30 each from Glamour Appliances, New York vide invoice number 05. The conversion factor per $ is “1 $ = Rs. 45” Item Description Quantity (in Nos) Rate (in ‘$’) Commodity Code Fax Machines 10 360 333 Insulators 25 30 2069 On 16-4-2009, an amount of Rs. 19,575 was paid as entry tax on the goods imported. 58
  63. 63. Processing Purchases & Sales Entries Step 1: Let us create the necessary ledgers to account for Imports. Creating Ledgers i. Imports Ledger Name Under Group Inventory Used in VAT/Tax Class Use for Assessable values are VAT Value Calculation affected Returns Imports Purchases Yes Yes Imports No Accounts ii. Entry Tax Ledger Ledger Under Inventory values are affected Entry Tax Current Assets No iii. Sundry Creditor Ledger Create the sundry creditor ledger – Zeta Electronics by following the steps given in example 1. iv. VAT Commodity Creation Create the VAT Commodity with the following details: VAT Sl. Name Used For Commodity Schedule Number Schedule No. Code Serial Number 1 Fax Machine VAT 333 First Schedule – Part C 32 v. Stock Item – Air Conditioner Create the stock item with the details as given in the following table: VAT Details Name Under Units Commodity Rate of VAT Fax Machines Primary Nos Fax Machine 12.5% 59
  64. 64. Processing Purchases & Sales Entries Step 2: Let us enter the transactions in Tally.ERP 9. i. Creating a purchase invoice for Import of goods Go to Gateway of Tally > Accounting Vouchers > F9: Purchase 1. Enter the reference number in the Ref field 2. Select Glamour Appliances in the Party’s A/c Name field from the List of Ledger Accounts 3. In the Party Details screen, enter/modify the required details 4. Select Imports ledger in the Purchase Ledger field from the List of Ledger Accounts 5. On selecting the Imports ledger, the VAT/Tax Class appears as Imports 6. Select the Name of Item as Fax Machines from the List of Items 7. Enter the Quantity as 10 and Rate as $360. The value is automatically displayed in the Amount field 8. Select the Name of Item as Insulators from the List of Items 9. Enter the Quantity as 25 and Rate as $30. The value is automatically displayed in the Amount field 10. The field Show Statutory Details will be set to No 11. Enter the details in the Narration field if required Figure 2.43 Purchase Invoice – Imports 12. Press Y or Enter to accept and save. 60
  65. 65. Processing Purchases & Sales Entries ii. Creating a Voucher for Payment of Entry Tax To create an entry for payment of entry tax, Go to Gateway of Tally > Accounting Vouchers > F5: Payment 1. Select the Bank ledger as National Bank in the Account field (create a bank ledger with the name National Bank by using Alt+C key combination) 2. Debit the Entry Tax ledger 3. Enter the amount as 19,575 4. Enter the details in the field Narration, if required Figure 2.44 Payment Voucher – Payment of Entry Tax 5. Press Y or Enter to accept and save. 61

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